US Credit Rating Downgrade, Poor China Data, Stock Market News, and Geopolitics
Latest stock market news
• The downgrade of the US credit rating after the close of trading on Friday is reflected in quotes today.
US stock index futures are down 1%.
At the far end, US Treasuries are down almost 1%.
The US dollar is down 0.3%.
Gold is up more than 1% and back above $3,200.
Bitcoin has been rising above $107,000 but has not gone higher yet and is just below $105,000 this morning.
• It was a bad day in Asia, as a slump in retail sales in China underscored how far the country will have to go to transition from an export-led to a domestic-demand economy. It is clear that consumers there are not in a mood to buy, and it is not clear that Beijing wants to change that.
So President Donald Trump is telling Americans they should make do with fewer dolls and crayons, while pushing trade policies that indirectly force Chinese consumers to buy more.
• US Treasury Secretary Bessent on Sunday criticised potential trading partners, urging them to offer "good faith" deals or face receiving a tariff rate sent by letter. He also hinted that the US only has time to deal with 18 major trading partners, leaving the rest to sway in the wind.
That still leaves the effective tariff on U.S. imports at about 13%, the highest since the 1930s and equivalent to a 1.2% GDP tax hike, which Trump is asking Walmart to roll into its margins rather than pass on to voting shoppers.
It will be interesting to see what Target, Lowe's and Home Depot have to say this week about this idea, which is reminiscent of state-run pricing in the Soviet command economy.
• Trump's tax bill. Trump needs revenue from tariffs, in part to fund his tax-cutting package, which has finally passed a House committee and could be voted on later this week. The massive bill is estimated to add $3 trillion to $5 trillion to the national debt over a decade and is one reason Moody's joined its peers in downgrading the U.S. last week.
Ratings haven't really mattered much since the financial crisis, when the collapse of the subprime mortgage market tarnished the reputations of some agencies and funds abandoned their AAA mandates.
But the news appeared to have struck a nerve with foreign investors already worried about the unpredictable nature of U.S. policy, and Wall Street futures fell 1% or more today. Ten-year yields rose about 5 basis points, and the dollar fell, albeit modestly.
• Euro supporters will be pleased by the surprise victory of a pro-European candidate in the elections in Romania, as well as victories for centrist parties in Poland and Portugal.
• The end of the oil boom, - Bloomberg. Overall U.S. oil production growth has likely peaked due to low prices, and shale companies are cutting spending. However, a significant drop in output is unlikely.
• Inflows into spot BTC ETFs continue. Cumulative inflows continue to break records - Farside data.
• Binance, Kraken hit by attack similar to Coinbase - Bloomberg
Binance and Kraken are among the major cryptocurrency exchanges that have been targeted by the same type of social engineering hack recently reported by Coinbase - Bloomberg.
• 5G-A connection launched in China. Speed up to 10 Gbps and direct access to satellites.
• Elon Musk has announced that he will present his vision for a Mars colonization program next week ahead of a possible ninth test flight of the Starship rocket - Reuters.
The talk will be broadcast live on X.
• Several big retailers are set to report earnings this week.
Investors will also be reviewing housing data for April and eyeing a series of speeches from the Federal Reserve following a week in which major U.S. indexes rose and amid mounting pressure from President Trump for the central bank to act on interest rates.
• Britain overtakes China in US Treasury holdings - FT
Britain has become the second-largest foreign holder of US Treasuries for the first time since 2000, overtaking China.
Chinese investment fell to $765 billion, while British investment rose to $779 billion.
China has been gradually reducing its holdings of US securities, shifting its focus to other assets, particularly gold.
• The White House on Friday criticized the decision by ratings agency Moody's Ratings to downgrade the U.S. credit rating, calling it a political decision.
• Sam Altman said that ChatGPT will be able to remember everything about the user in the future. Everything, that's everything: what books he read, what he talked about, what he watched.
• Apple plans to increase iPhone assembly in India to 60-65% this fall, Wedbush says.
It's part of a diversification strategy amid trade risks with China, but the company may return some production to China in the future.
• In recent months, the White House and congressional officials have been scrutinizing Apple's (AAPL) plans to strike a deal with Alibaba (BABA) that would use Alibaba's AI on iPhones in China, the NYT reported.
• According to the Kantar BrandZ 2025 rating, the total value of the world's 100 most valuable brands has grown to a record $10.7 trillion, which is $9.3 trillion more than 20 years ago.
It comes out to almost 11% per annum.
Apple tops the rating for the fourth year in a row with a value of $1.3 trillion.
• Banks are essential to unlock the full potential of stablecoins - PayPal.
This was stated by Jose Fernandez da Ponte, PayPal's senior vice president of digital currencies, during a panel discussion at Consensus 2025 in Toronto.
• Nvidia, Cisco, and OpenAI to Power Stargate UAE Data Center - CNBC
Nvidia CEO says next chip after H20 for China will not be Hopper series.
Nvidia is evaluating how to enter the Chinese market after the US government imposed restrictions on sales of its Hopper H20 chip there, but will not release another chip in the series.
• Trump blasted Walmart (WMT) for raising prices due to tariffs.
“Walmart needs to STOP blaming tariffs for higher prices across the chain. Walmart made billions of dollars last year — way more than expected. Between Walmart and China, they need to, as they say, ‘swallow the tariffs’ and charge their valued customers NOTHING. I’ll be watching this, and so will your customers!!!”
• Nvidia-backed CoreWeave soars 100% post-IPO
as investors see demand for AI outpacing 'risky' business model
• The European Investment Bank is working on a new project to boost European capabilities in artificial intelligence and semiconductors, with the aim of raising 70 billion euros by 2027, its chief executive said.
• Swiss running brand On (ONON) gained $3 billion in the past week,
with Nike and Adidas next.
With the help of Zendaya, Roger Federer and Elmo, On continues to beat revenue expectations on its way to a $20 billion market cap.
• Tesla's (TSLA) robotaxi debut will be invite-only and feature a lot of cameramen.
Tesla's robotaxi debut in Austin in June will go ahead, but it will be by invitation only, said a Morgan Stanley analyst who visited the company's Palo Alto office.
• Nissan has said it is open to working with Chinese state-owned Dongfeng to share production facilities around the world - BBC.
Nissan is currently trying to strengthen its position in the Chinese market, where it faces stiff competition and falling prices. The manufacturer has been cooperating with Dongfeng for more than 20 years, including a joint venture in Wuhan, China.
Key events that could impact markets on Monday:
- Final EU CPI data for April.
- Fed speakers include Bank of Atlanta President Raphael Bostic, Vice Chairman Philip Jefferson, Bank of New York President John Williams, Bank of Dallas President Laurie Logan, Bank of Minneapolis President Neel Kashkari.
Current Fundamental Reviews
• China imposes anti-dumping duties on plastic - Reuters.
The US received the highest duties - 74.9%. The EU, Japan and Taiwan received up to 35.5%. Individual companies from Taiwan and Japan received reduced rates of up to 4% and 24.5% respectively.
• The European Union will find ways to overcome any obstacles that Hungary and Slovakia may try to create for the EU and Ukraine, says EU Commissioner for Defence and Space Andrius Kubilius.
• Canada has maintained 25% tariffs on U.S. goods," Canada's finance minister said, denying that most such tariffs had been suspended.
• The UK and EU are holding a summit next week to discuss the future of bilateral relations.
The sides are expected to consider trade, security and cooperation in a changed geopolitical environment. The summit will be the first such meeting in several years.
• In Romania, the independent candidate, Bucharest Mayor Nicusor-Daniel Dan, is leading in the presidential elections.
According to the latest polls, 46% of voters are ready to support the leader of the Alliance for the Unity of Romanians (AUR), the far-right George Simion, while 54% are ready to support the centrist Dan.
• The government of a Western European country asked Telegram to silence conservative voices ahead of today's presidential elections in Romania.
I categorically refused, - the messenger's co-founder Pavel Durov.
• On the eve of the presidential elections in Poland, Russian special services have launched a new wave of information attacks on Europe.
In particular, they are implementing a large-scale special operation called Doppelganger, which translates as "Double".
Through the fake pages of well-known media outlets, Russians are massively disseminating disinformation and trying to discredit Ukraine and the European politicians who support it.
• Merz did not rule out sending refugees to third countries and advocated a “more decisive fight” at the EU level against illegal migration.
• Bloomberg: China provided Pakistan with air defense aid and satellite imagery during military clashes with India
Pope Leo XIV officially takes office as Pontiff.
• Bessent said the Trump administration would ensure that US GDP grows faster than the debt,
thereby stabilizing the debt-to-GDP ratio.
• On prices, the Treasury Secretary said Walmart's price hike warning was a "worst-case scenario."
• Data from China showed a slowdown in the economy
China Retail Sales (YoY): +5.1% (expected +6.0%, previous: +5.9%)
Chinese Unemployment Rate: 5.1% (expected 5.2%, previous: 5.2%)
Chinese Industrial Production (YoY): +6.1% (expected +5.7%, previous: +7.7%)
• Israel has launched a major military operation in the Gaza Strip,
Operation Gideon's Chariot, to destroy Hamas and free hostages, the Israel Defense Forces said.
Trump is working on a plan to resettle a million Palestinians in Libya.
In exchange, the country's leadership is offered to unfreeze billions of dollars that are in the United States. The Palestinians are promised housing and scholarships.
Hamas denies knowledge of the plan and promises to resist.
• US and EU break deadlock to begin tariff talks - FT
• The liberal mayor of Warsaw and member of the current ruling party, Rafal Trzaskowski, will compete for the post of head of Poland in the first round of elections on May 18. His opponents are two right-wing candidates.
His chance of getting into the second round is 31%, according to Politico opinion polls. Back in January, Trzaskowski spoke in favor of Ukraine's membership in NATO and the EU, but at the debate on May 12 he said that "Ukraine should be a buffer zone."
• Trump said he was ready to travel to China for talks with Xi Jinping.
• The Trump administration has eased sanctions imposed on Turkey after it purchased Russian S-400 systems, Erdogan says.
• Five current and former employees of the NATO Support and Procurement Agency (NSPA) have been arrested on suspicion of corruption in contracts to buy munitions and drones for the alliance.
The first two arrests were announced on May 14 by the Belgian prosecutor's office, while three others were detained in the Netherlands.
• The United States will discuss the withdrawal of some troops from Europe by the end of 2025.
This was stated by US Permanent Representative to NATO Matthew Whitaker at a conference in Estonia. According to him, the discussion will begin after the June NATO summit in The Hague.
• Saudi Arabia is investing trillions of dollars in economic diversification through large-scale projects.
• The largest influx will be received by NEOM, in particular “The Line” (a futuristic city), worth more than $1 trillion, and the total amount of all NEOM developments will reach $1.5 trillion.
• China has renamed 27 towns in Arunachal Pradesh, a region that India claims as its sovereign territory — Clash Report.
China calls the area “Zangnan,” or southern Tibet, asserting its sovereignty over the region.
India has strongly rejected the move, calling it “futile and absurd.”
• Erdogan announced the discovery of one of the largest gas fields in the Black Sea.
• Trump on the Fed: "Almost everyone agrees that the Fed should cut rates as soon as possible, not drag its feet. But Powell, already a legend for late decisions, will likely screw it up again. But who knows???"